The High Finance Life of a CEO

Every year we pass the date of our own death without knowing it. We're approaching exactly one year until Curio City's demise, although I don't know the exact date yet. I have to renew my SSL certificate by Sept. 16, and even though that's only $35, I don't see myself doing it again a year from now. Next year's SSL expiration date will probably be Curio City's, too.

A year is not long at all in some ways, and a very long time in other ways. Circumstances could convince me to keep it going beyond then (or to shut it down earlier). If this Christmas leaves me with a lot of stock still hanging around, and if it still brings in more money than it costs to sell it, then I might persuade myself to flog it through one more Christmas after this one. As long as I'm turning dead merchandise into money and generating a regular paycheck, it makes sense to keep going -- especially if I can restore payroll to its former level after I get out of debt. In my wildest fantasy, Curio City might even buy me a new phone or laptop before it goes toes-up.

Payroll's going to have to up its game, though. Between losing First Class shipping rates for five days and having to issue a large refund, Curio City turned in its worst week in 10 years. As of this morning this week's paycheck is $8.06 (before taxes!), and I had to put in more hours than normal to pack up four international shipments. That's not even a pack of smokes.

Imaginary Milestones

Excel says that Curio City passed $500,000 in lifetime planned sales recently. Skim to the end, where I wax philosophical, if you don't like numbers. To me, generating statistics is the fun part of a business, inasmuch as "work" and "fun" can ever coexist. 
 
Last December brought my total planned sales to $506,000 since 2007 (as far back as reliable records go). Actual life-to-date (LTD) sales reached $434,352.
The spread between plan and reality isn't huge because I adjust the plan as we go along. In the earliest years, before I knew what to expect, I hoped for explosive early growth that would gradually settle down as the business matured. I pulled these numbers out of thin air:

·         2008: $ 85,500

·         2009: $128,000

·         2010: $160,000

·         2011: $176,500

·         2012: $185,000  

·         ...and that's as far out as I could see.

If I'd hit those marks, I'd have been earning $37,000 plus profits by 2012 -- not exactly Mitt Romney-level wealth, but adequate for someone who had never earned much more than $50,000 working for The Man. 

Reality had other ideas. Actual sales for the same period:

·         2008: $51,803

·         2009: $59,905

·         2010: $61,816

·         2011: $64,566

·         2012: $63,665 (first-ever decline)

·         2013: $50,528 (first major decline)

I didn't earn $40,000 in 2012. I made a little over $12,000, and didn't quite clear $10,000 last year. Two things got in the way: The realities of trying to compete in a brutal and ever-changing marketplace, and the Great Recession. 

So these scaled-back "realistic" plans made up this post's $500,000 milestone:

·         2008: $51,330

·         2009: $64,753

·         2010: $68,891

·         2011: $67,998

·         2012: $69,408

·         2013: $69,408

·         2014: $65,211 (that's 1% over 2011's high-water mark)

It's obvious now that Curio City will never crack $100,000 in annual sales, and that means that I'm never going to earn $20,000. The funny thing about expectations is that we adapt to our circumstances. I've come to regard $15,000 as a respectable definition of success. 

Now here's the philosophical part.

A rational actor would stop plumbing Curio City's depths year after year and instead pursue a more lucrative future as a minimum-wage drone. After all, minimum wage just went up to $9. That's $18,720 a year based on a 40-hour week. But a real rational actor can rationalize, right? So here's my rationale: 

·         First, 10 years of working at home with no boss has destroyed my tolerance for wage slavery and simultaneously obliterated my credibility as a slave; I never thrived in traditional work environments and would have a harder time tolerating regimentation now.

·         Second, Curio City doesn't suck down 40 hours of life most weeks. I work hard during Q4 and slack off during the dog days of Q2. I probably average 20 hours a week over the course of a year. Twenty hours at that same $9 would only bring in $9,360, and that's less than the $9,930 that Curio City paid me LY. When minimum wage tops out at $11 in two years it will still only be good for $22,880, or $11,440 for half-time work -- and that's within realistic expectations for Curio City pay.

·         Third (and most important), my wife's happy in her career. She earns enough to buy us both a modestly comfortable lifestyle and my ample free time gives me the freedom to be a housewife. I only need to earn enough money to keep myself in beer and tobacco. I don't want things that I don't need, and there's nothing else that I need. This arrangement suits both of us fine, most of the time.

·         Finally, I'm getting close to the exit ramp. In a year and a half I could theoretically tap into my retirement accounts without penalties. In three years I could take early Social Security benefits. I'm just seven years away from Medicare. And full retirement age is less than nine years out. As fast as the years fly by, those goals are almost upon me. Maybe I'll keep Curio City going through retirement, or maybe I'll fold it, but it will be nice to have those options. 

Making $434,000 in nine years is really dismal for a retail business, but it's pretty remarkable for some old guy selling stuff out of his cellar. It's bought me a lot of beer and tobacco, anyway.

10k

Right now Quickbooks is on transaction number 9999. I'm going to roll 10,000 at any moment now. That includes some noise, such as replacement shipments that went out for free – but it is close enough to the actual number of shipments to be an official milestone. A lot closer than Sunshop’s 10,270 tally, anyway.

It took nearly eight years (from November 21, 2005) to hit 10,000. Amazon undoubtedly does that many sales on a slow day -- hell, for all I know they make 10,000 sales in an hour. But I processed and shipped every single one of those sales myself, so that’s cause for celebration. Won't you join me?

Yay! Whee! Oboy!

OK, celebration’s over. Back to work.

Time Not Wasted

Surprisingly, the New England Gift Show was not a complete waste of time this year. I found one product that hits all the right notes: It’s clever, it’s useful, it’s easy to explain, it’s unbreakable, it’s easy and cheap to ship, it’s a little over my $10 minimum price point, and there aren’t many online competitors. Its creator hates filling retail orders (“onesies”) and would love to steer all of his online business to me so that he can focus on manufacturing and wholesaling. That could be huge -- even game-changing -- if it really pans out. At the very least, the product ought to sell reasonably well and the opening investment was small. I’ll link you to it next week when my inventory arrives.

And speaking of wasting time...I apologize to my tiny cadre of loyal readers for skipping last week's blog update, but I really had nothing to say and decided not to waste my time and yours saying it. This is a decision I intend to repeat every now and again.
 
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I got seven sales within 24 hours of blundering back through the deep dark Google bid-setting jungle and letting their algorithm spend as much as it wants. I had been fine with declining sales as long as costs and inventory declined in lockstep…but my paycheck is one of those costs. Unfortunately, I need a paycheck. Good beer isn’t free and there are no government vouchers.
That quick payoff was encouraging, but my spend also rose by a crippling $25 per day and sales didn’t increase by anything like the $250 that would justify that. In fact, they dropped back to the expected 2-3 per day, and those have all been in the $10-20 range. So I’m back where I started before I upset the advertising apple cart in the first place – spending way too much ($25-30 in ads) for way too little ($40-60 in sales). I liked it better when I was spending very little for next to nothing.

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Minor milestone: Sunshop reached order number 110000, its 10,000^th transaction. That includes test transactions, so it’s not meaningful. Quickbooks’ count of 9,731 is closer to the truth (albeit also slightly inflated).